If you're like most Americans, you have a credit card. In 2022, there were a whopping 1.1 billion cards in circulation, and about 83 percent of individuals have at least one card.
What We'll Cover
- The Downsides of a Standard Cash Advance
- How to Withdraw Cash From Credit Card Without Fees
- Balance Transfer Check
- Use PayPal to Get Cash From Credit Card
- Pay Bills or Make Purchases for Others
- Use Cash Back Rewards
- Buy Generic Gift Cards
- FAQs About Getting Cash From a Credit Card
- Does a cash advance affect my credit score?
- Can I withdraw cash from an ATM with a credit card?
- Can I get cash back on credit card purchases?
- The Bottom Line
But, while we're all used to buying now and paying later, using a credit card typically means swiping for a specific purchase, rather than getting cash upfront to spend however you like.
Or, at least that's how it is for most credit cards. Depending on your situation, there are multiple ways to get cash from a credit card. These options can often work better than swiping because they give you some breathing room about how to spend your money.
So, with that in mind, let's look at the different ways to get cash from a credit card.
The Downsides of a Standard Cash Advance
Credit cards with high cash advance limits may seem appealing at first, but getting money this way can be detrimental for numerous reasons, including:
- Immediate Fees - Credit cards typically charge between three and five percent for a cash advance, and that's on top of any interest rates or other convenience fees. So, if you're taking out $100, you're actually withdrawing $105 since that's what you'll have to pay back.
- High Interest Rates - Cash advances are treated differently than regular credit card purchases, so they often come with a higher interest rate. Even worse, this rate starts from the moment you get the money, not at the next billing cycle. So, by the time you can repay the cash advance, you'll have accrued at least some interest, even if you repay quickly.
- Lower Credit Limit - Credit card issuers have a separate limit for cash advances, so you might not be able to get all the money you need. For example, perhaps you have a $10,000 limit for purchases but then only $1,000 for cash advances. If you need more than $1,000, you're out of luck.
How to Withdraw Cash From Credit Card Without Fees
Technically, many credit cards give you the option to go to an ATM and withdraw cash (aka a cash advance). Unfortunately, while this method may be convenient, it comes with hefty fees and interest rates. So, if you're going to go that route, you have to plan accordingly.
That said, there are some creative ways to get cash without high fees and rates, such as:
Balance Transfer Check
In this case, you can request a check for a balance transfer payment. However, many credit cards try to send this check directly to the card or account from which you're transferring the money. You can ask your issuer to give you the check directly, though, and if so, you'll incur smaller fees. Typically, a balance transfer is either $5 or five percent of the borrowed amount, whichever is greater.
The advantage of going this route is that you can typically get a reprieve on interest rates for a specific period. For example, a company may offer a one-percent APR for the first year, so you'll want to pay it back before then.
Use PayPal to Get Cash From Credit Card
Money apps like PayPal or Venmo allow you to attach credit cards to your account. In this case, you can send money to a friend or family member with a PayPal account and then borrow the cash from them once the transfer is complete. Or, if you set up multiple PayPal accounts, you can pay one with the other and take out the money yourself.
The advantage of this option is that you pay a one-time nominal transaction fee, and the payment will be treated as any other purchase with your credit card. So, you won't get hit with interest rates until your next monthly statement. Although this is a viable credit card cash advance hack, you still have to be careful not to exceed your limit and that you can repay the money without accruing too much interest.
Pay Bills or Make Purchases for Others
Instead of paying your friends or family directly, you can pay off their bills or make one-time purchases on their behalf. Then, your friend gives you the cash for the payment so you can use it however you like. Again, the purchase will be treated as anything else you put on your credit card, so you won't get hit with extra penalties or fees.
Use Cash Back Rewards
If you need cash in an emergency, this option won't work, but it can allow you to build up a small fund over the long term. Plus, if you're going to use a credit card anyway, you might as well get rewards for your purchases. How much cash back can you get off a credit card? The answer depends on the card you qualify for and other variables like your credit history. Even the types of purchases you make can give you better cash back than others.
For example, some credit cards may give you two or three-percent cash back on gas or utility payment purchases and one-percent back on everything else. Again, you won't be able to withdraw cash in an emergency, but these rewards will add up over time. The best thing to do is to build up to a specific amount (i.e., $250) and then keep it available for whenever an emergency arises.
Another point to consider is signing up for a credit card with an introductory bonus offer. For example, if you spend $500 in the first three months, you can qualify for $100 cash back. Best of all, you can use your credit card for big purchases (i.e., utility bills for friends) and then pay them off before you get the reward.
Buy Generic Gift Cards
You can use a credit card to buy a Visa prepaid card or other gift cards to stores you shop at regularly. Then, you can withdraw cash or get cash back from purchases by using the prepaid card. This option doesn't incur the same fees as a cash advance, and you have more flexibility about how and where you can spend your money.
For example, if you get a prepaid debit card, you can use that and get cash back for purchases at department or grocery stores.
FAQs About Getting Cash From a Credit Card
Does a cash advance affect my credit score?
Yes, all credit card transactions will affect your credit score, but not always negatively. For example, if you withdraw money and pay it back on time with interest, your score will go up. However, if you default on your payments, your score will decrease. As a rule, it's easy to lose points but much harder to get them back.
Can I withdraw cash from an ATM with a credit card?
Yes, some credit cards can issue a PIN, so you can make a cash advance withdrawal from an ATM or bank. If you don't have a PIN already, you can ask your issuer for it or have them draft you a new one.
Can I get cash back on credit card purchases?
If you're talking about a cash withdrawal like what you can do at a grocery store, most credit cards don't allow that. However, you can earn residual cash back through a rewards program. Even though you typically only get one or two percent back, it adds up over time.
The Bottom Line
No matter how you choose to get cash from a credit card, you'll likely incur at least a small fee, and you have to worry about long-term interest rates. However, you don't have to accept the penalties for a standard cash advance. With a little creativity and ingenuity, you can borrow against your credit limit and minimize the expenses you'll have to pay to do so.
At the end of the day, though, you never want to borrow more than you pay back within a reasonable period. Ideally, you can repay the cash before the next billing cycle, but if you do accrue some interest, you have to budget for that accordingly.
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